Correlation Between Vanguard Dividend and ProShares
Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend and ProShares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard Dividend and ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Dividend Appreciation and ProShares SP 500, you can compare the effects of market volatilities on Vanguard Dividend and ProShares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard Dividend with a short position of ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and ProShares.
Diversification Opportunities for Vanguard Dividend and ProShares
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and ProShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 and Vanguard Dividend is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard Dividend Appreciation are associated (or correlated) with ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and ProShares go up and down completely randomly.
Pair Corralation between Vanguard Dividend and ProShares
Considering the 90-day investment horizon Vanguard Dividend Appreciation is expected to generate 0.96 times more return on investment than ProShares. However, Vanguard Dividend Appreciation is 1.05 times less risky than ProShares. It trades about 0.12 of its potential returns per unit of risk. ProShares SP 500 is currently generating about 0.08 per unit of risk. If you would invest 15,776 in Vanguard Dividend Appreciation on August 28, 2024 and sell it today you would earn a total of 4,619 from holding Vanguard Dividend Appreciation or generate 29.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Dividend Appreciation vs. ProShares SP 500
Performance |
| Timeline |
| Vanguard Dividend |
| ProShares SP 500 |
Vanguard Dividend and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Dividend and ProShares
The main advantage of trading using opposite Vanguard Dividend and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend position performs unexpectedly, ProShares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ProShares will offset losses from the drop in ProShares' long position.| Vanguard Dividend vs. Vanguard High Dividend | Vanguard Dividend vs. Vanguard Real Estate | Vanguard Dividend vs. Schwab Dividend Equity | Vanguard Dividend vs. Vanguard Growth Index |
| ProShares vs. iShares Core Dividend | ProShares vs. SPDR SP Dividend | ProShares vs. Invesco SP 500 | ProShares vs. Vanguard Dividend Appreciation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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